He shares his advice on how the profession can bolster stability
Earlier this year, Thomson Reuters Institute published its 2025 Report on the State of the New Zealand Legal Market. Among the report’s findings was that the legal market in New Zealand rebounded in the previous year, with law firms indicating that profits were stabilising after a period of volatility.
In the first part of this interview with NZ Lawyer, Thomson Reuters Institute’s senior manager – enterprise content lead William Josten delves deeper into the report, sharing his thoughts on what the results say about the legal profession’s current state and what it can do to improve stability and maintain financial health.
The legal profession ended 2024 and started 2025 in a very favourable position with strong growth potential and profitability. While the initial outlook for the overall NZ economy is promising, recent global economic uncertainties could challenge this potential. The good news for law firms is that economic slowdowns generally bring short-term boosts in demand for legal services, though prolonged slowdowns could negatively impact the legal market, which serves as a lagging indicator for the overall economy. The beginning of 2025 should see NZ law firms in a strong position, but long-term stability will depend on broader economic trends, many originating outside of New Zealand’s borders."
To further improve stability and bolster profits, law firms should consider several strategic choices.
Protecting revenue streams: Enhance pricing and rate negotiation discipline to protect revenue streams. This approach is particularly effective because it lies within the firm's control. Establishing a rate structure that provides more predictable projections for revenue growth and implementing firm-specific guidelines for rate negotiations can streamline this process
Addressing ‘fee erosion’: Increase diligence on internal billing practices, particularly proactive billing adjustments ("write downs"). Many firms lose significant potential revenue annually due to last-minute discounts, and addressing the issue can be one of the fastest ways to enhance revenue stability and improve overall firm profitability
Reimagining legal service delivery: Clients are looking to their outside law firms for ideas on how to implement emerging AI technologies into the practice of law and legal services. Firms' efforts to innovate and collaborate with clients in this area will be rewarded, especially if the new capabilities closely align with the clients’ own strategic priorities and business ambitions
By focusing on these areas, law firms can better navigate the evolving legal market and maintain financial health.
